Talking Points:
- EURJPY Technical Strategy: Flat
- EURJPY puts in its fourth consecutive day of gains after establishing a new near-term low
- Resistance below 137 as confirmed by an extended 4-hour (or daily) candlestick wick could provide short entry opportunity.
Yen weakness has continued as a pervasive theme as the financial world has taken a step back from the cliffs of panic. Since bottoming just above the 132 support level last week, EUR/JPY has ripped higher by almost 400 pips, showing very little sign of resistance as sellers yielded to rampant demand.
But the outsized down-trend that began towards the end of August as Chinese equity weakness began to spill out to the rest of the world provides a bearish tone for the pair that could make short setups attractive in the coming days should resistance come in south of the 137 level (the higher-low before the previous up-trend came to an end).
Resistance at 136.40 could be particularly interesting, as this is the 61.8% retracement of the most recent ‘panic move.’ For now, the threat of continued strength in the pair is enough to give caution to short sellers.
